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Orexigen’s New Diet Pill Has Risks, Unclear Benefits

Dec. 3 (Bloomberg) -- Orexigen Therapeutics Inc.’s new diet
pill, Contrave, has safety risks and unclear benefits, according
to U.S. regulators deciding whether to approve the nation’s
first new prescription drug for obesity in more than a decade.

Contrave was linked to more cases of high blood pressure,
psychiatric side effects, dizziness and kidney dysfunction in
studies reviewed in a Food and Drug Administration staff report
released today. The drug met one of two recommended measures of
effectiveness.

Orexigen and partner Takeda Pharmaceutical Co. are the last
of three sets of companies seeking U.S. approval this year for
new medicines to treat the estimated one-third of Americans who
are obese. Safety concerns have doomed previous weight-loss
drugs, including Abbott Laboratories’ Meridia, which was pulled
off the market in October because of heart risks.

“They may have to do a thorough cardiovascular study
before approval,” said Elemer Piros, an analyst at Rodman &
Renshaw in New York, in a telephone interview today. “The clear
precedent is Meridia. It’s so fresh in our minds that I don’t
think the FDA wants to embark on a public experiment in an
uncontrolled setting without this information.”

Outside advisers to the FDA are scheduled to review the
Contrave findings Dec. 7 in Silver Spring, Maryland. A final
decision on approval is due by Jan. 31. Competing products being
developed by Arena Pharmaceuticals Inc. and Vivus Inc. were
delayed by the FDA in October because of safety concerns.

First Product

Orexigen, based in La Jolla, California, fell 66 cents, or
12 percent, to $4.81 at 4 p.m. New York time in Nasdaq Stock
Market composite trading, the biggest single-day percentage
decline since May 4, 2009. The stock has fallen 35 percent so
far this year. Arena, based in San Diego, gained 3 cents, or 2.2
percent, to $1.42. Vivus, of Mountain View, California, rose 15
cents, or 2.2 percent, to $6.87.

Piros downgraded Orexigen to “market underperform,” from
“market perform,” with a target price of $2.

Contrave, Orexigen’s first product, is a combination of two
approved drugs that target different parts of the brain that
influence appetite and cravings. The pill contains bupropion, an
antidepressant also used to quit smoking, and naltrexone, a
treatment for alcohol and painkiller addiction.

The safety concerns raised by the FDA are consistent with
what is known about the two components of Contrave, said Adam
Cutler, an analyst at Canaccord Adams in New York. He said the
advisory panel members are likely to vote that a cardiovascular
outcomes trial can wait until the drug is on the market.

Potential Upside

“If they get a chance to say they want more information
but they’re okay getting that after it’s approved, it might make
some people more comfortable,” Cutler said in a telephone
interview today. “If we were to come out of this panel with a
positive recommendation, I think you could see the stock up 200
percent or more.”

Cutler projects Contrave will be approved and bring in $1
billion in peak U.S. sales in 2016.

In terms of effectiveness, the proposed maintenance dose of
the drug helped patients lose 4.2 percent more weight than a
placebo pill after 56 weeks, short of the FDA recommended
benefit of 5 percent, the agency said. The drug met an
alternative benchmark that satisfies the FDA’s 2007 guidelines
by helping at least 35 percent of patients, twice the proportion
of those on placebo, lose at least 5 percent of their weight.

‘Difficult’ Analysis

“It is difficult to draw accurate conclusions about the
long-term efficacy” of the proposed maintenance dose of
Contrave, said Eric Colman, deputy director of the FDA’s
Division of Metabolism and Endocrinology Products, in a memo to
the advisory panel included in the staff report.

Two-thirds of American adults are overweight, raising their
risk of diabetes, heart disease, high blood pressure and cancer,
according to the 2008 National Health and Nutrition Examination
Survey. More than one-third of American adults are obese,
measured as a ratio between height and weight.

“You just have to look around and see the state of the
United States to realize this is a very big opportunity,” said
Joshua Schimmer, a biotechnology analyst at Leerink Swann in
Boston, in a telephone interview today. “It’s a big market.”

While the FDA has urged companies to research new diet
pills, safety is critical for weight-loss products because they
may be taken by millions of people for a long period of time.

The agency hasn’t approved a prescription weight-loss drug
since Basel, Switzerland-based Roche Holding AG’s Xenical in
1999. Safety concerns led to the withdrawal of Wyeth’s fen-phen
in 1997 and the rejection of Paris-based Sanofi-Aventis SA’s
experimental rimonabant drug in 2007. Wyeth is now owned by New
York-based Pfizer Inc.

Sales of prescription weight-loss drugs fell 11 percent
last year to $153.7 million, according to IMS Health Inc., a
research company in Norwalk, Connecticut. Of the almost 7.5
million prescriptions dispensed, four of every five were for
generic phentermine, a short-term appetite suppressant.